The following changes took place last year in Pavolik Company’s balance sheet accounts:
Asset and Contra-Asset Accounts Liabilities and Stockholders' Equity Accounts
Cash and cash equivalents $ 20 D Accounts payable $ 62 I
Accounts receivable $ 24 I Accrued liabilities $ 24 D
Inventory $ 58 D Income taxes payable$ 29 I
Prepaid expenses $ 19 I Bonds payable $ 204 I
Long-term investments $ 21 D Common stock $ 96 D
Property, plant, and equipment$ 395 I Retained earnings $ 82 I
Accumulated depreciation $ 82 I
D = Decrease; I = Increase.
Long-term investments that cost the company $21 were sold during the year for $46 and land that cost $45 was sold for $24. In addition, the company declared and paid $18 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Pavolik did not retire any bonds during the year or issue any new common stock.
The company’s income statement for the year follows:
Sales $ 1,020
Cost of goods sold 446
Gross margin 574
Selling and administrative expenses 420
Net operating income 154
Nonoperating items:
Loss on sale of land $ (21 )
Gain on sale of investments 25 4
Income before taxes 158
Income taxes 58
Net income $ 100
The company’s beginning cash balance was $128 and its ending balance was $108.
Required:
1. Use the indirect method to determine the net cash provided by operating activities for the year.
2. Prepare a statement of cash flows for the year.